-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QHk2HZ29Ej6KZfONArgXCk9hLnip7ppnz8XQswZhycUGcJpLp9mlCLkmzP4rHiS8 OXG/Zy7QYtURQXxvZcR/fw== 0000950152-96-005191.txt : 19961016 0000950152-96-005191.hdr.sgml : 19961016 ACCESSION NUMBER: 0000950152-96-005191 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960801 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19961015 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NCS HEALTHCARE INC CENTRAL INDEX KEY: 0001004990 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DRUG STORES AND PROPRIETARY STORES [5912] IRS NUMBER: 341816187 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-27602 FILM NUMBER: 96643064 BUSINESS ADDRESS: STREET 1: 3201 ENTERPRISE PARKWAY STREET 2: SUITE 2200 CITY: BEACHWOOD STATE: OH ZIP: 44122 MAIL ADDRESS: STREET 1: 1400 MCDONALD INVESTMENT CENTER STREET 2: 800 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114 8-K/A 1 NCS HEALTHCARE CURRENT REPORT/AMENDMENT #1 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- FORM 8-K/A-1 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: August 1, 1996 -------------- (Date of earliest event reported) NCS HEALTHCARE, INC. -------------------- (Exact name of Registrant as specified in its charter) Delaware 0-027602 34-1816187 - ---------------------------- ------------------ -------------------- (State or other jurisdiction (Commission (I.R.S. employer of incorporation) file number) identification no.) 3201 Enterprise Parkway, Suite 220, Beachwood, Ohio 44122 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (216) 514-3350 -------------- 2 The undersigned Registrant hereby amends the following items, financial statements, exhibits or other portions of its Current Report on Form 8-K dated August 1, 1996 as set forth in the pages attached hereto: "Item 7. Financial Statements, Pro Forma Financial Information and Exhibits" is hereby amended and restated to include historical and pro forma financial information required in connection with the acquisition of IPAC by the Registrant. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. IPAC Pharmacy, Inc. Financial Statements Report of Independent Auditors Balance Sheet at July 31, 1996 Statement of Operations for the period from October 1, 1995 to July 31, 1996 Statement of Cash Flows for the period from October 1, 1995 to July 31, 1996 Notes to Financial Statements (b) PRO FORMA FINANCIAL INFORMATION. Pro Forma Consolidated Balance Sheet Pro Forma Consolidated Statement of Income (c) EXHIBITS.
Sequential Exhibit No. Description Page No. - ----------- ----------- -------- 2.1 Asset Purchase Agreement, dated as of July 31, 1996, by * and among NCS HealthCare, Inc., a Delaware corporation, NCS HealthCare of Oregon, Inc., an Ohio corporation, IPAC Pharmacy, Inc., an Oregon corporation and Prestige Care, Inc., a Washington corporation (without schedules). 99.1 Non-Compete Agreement, dated as of July 31, 1996, by and * between NCS HealthCare of Oregon, Inc., an Ohio corporation, and Phillip G. Fogg. 99.2 Non-Compete Agreement, dated as of July 31, 1996, by and * between NCS HealthCare of Oregon, Inc., an Ohio corporation, and Charles Maples. - ---------------------------- * Previously filed.
2 3 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NCS HEALTHCARE, INC. By: /s/Jeffrey R. Steinhilber ------------------------- Jeffrey R. Steinhilber, Senior Vice President and Chief Financial Officer Date: October 14, 1996 3 4 REPORT OF INDEPENDENT AUDITORS The Board of Directors and Stockholders of NCS HealthCare, Inc. We have audited the accompanying balance sheet of IPAC Pharmacy, Inc. (the Company) as of July 31, 1996, and the related statements of operations and cash flows for the period from October 1, 1995 to July 31, 1996 (date of acquisition by NCS HealthCare, Inc.). These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of IPAC Pharmacy, Inc. at July 31, 1996, and the results of its operations and its cash flows for the period from October 1, 1995 to July 31, 1996, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Cleveland, Ohio August 20, 1996 5 IPAC PHARMACY, INC. BALANCE SHEET JULY 31, 1996 ASSETS CURRENT ASSETS Cash and cash equivalents...................................................... $ 670 Accounts receivable, less allowance for doubtful accounts of $225,000.......... 1,869,076 Inventories.................................................................... 783,426 Deferred income taxes.......................................................... 95,719 ---------- Total current assets................................................... 2,748,891 PROPERTY AND EQUIPMENT Fixtures and equipment......................................................... 919,103 Building and improvements...................................................... 221,537 ---------- 1,140,640 Less accumulated depreciation.................................................. 577,053 ---------- 563,587 OTHER ASSETS Lease deposits................................................................. 9,761 Organizational costs, less accumulated amortization of $21,660................. 42,744 Goodwill, less accumulated amortization of $612,782............................ 5,140,849 Noncompete covenant, less accumulated amortization of $61,254.................. 288,746 ---------- 5,482,100 ---------- TOTAL ASSETS..................................................................... $8,794,578 =========
See accompanying notes 6 IPAC PHARMACY, INC. BALANCE SHEET JULY 31, 1996 LIABILITIES AND STOCKHOLDER'S EQUITY CURRENT LIABILITIES Accounts payable............................................................... $ 301,053 Accrued payroll................................................................ 190,981 Income taxes payable........................................................... 238,600 Accrued expenses and other..................................................... 301,922 Current portion of long-term debt.............................................. 473,422 ---------- Total current liabilities.............................................. 1,505,978 Long-term debt, excluding current portion........................................ 3,081,998 STOCKHOLDER'S EQUITY Common stock................................................................... 100 Additional paid-in capital..................................................... 2,824,935 Retained earnings.............................................................. 1,381,567 ---------- 4,206,602 ---------- Total liabilities and stockholder's equity....................................... $8,794,578 =========
See accompanying notes 7 IPAC PHARMACY, INC. STATEMENT OF OPERATIONS OCTOBER 1, 1995 TO JULY 31, 1996 Revenues........................................................................ $11,523,515 Cost of revenues................................................................ 6,362,342 ----------- Gross profit.................................................................... 5,161,173 Selling, general and administrative expenses.................................... 4,673,059 ----------- Operating income................................................................ 488,114 Interest income................................................................. 3,792 Interest expense................................................................ 346,965 ----------- Income before income taxes...................................................... 144,941 Income tax expense.............................................................. 170,300 ----------- NET LOSS........................................................................ $ (25,359) ==========
See accompanying notes 8 IPAC PHARMACY, INC. STATEMENT OF CASH FLOWS OCTOBER 1, 1995 TO JULY 31, 1996 OPERATING ACTIVITIES Net loss......................................................................... $ (25,359) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization............................................. 499,063 Provision for doubtful accounts........................................... 256,669 Deferred income taxes..................................................... (68,300) Changes in assets and liabilities: Accounts receivable.................................................... (213,906) Inventories............................................................ (27,888) Accounts payable....................................................... (83,039) Accrued payroll........................................................ (207,092) Income taxes payable................................................... 238,600 Accrued expenses and other............................................. 32,761 --------- Net cash provided by operating activities........................................ 401,509 INVESTING ACTIVITIES Capital expenditures for property and equipment.................................. (167,434) --------- Net cash used in investing activities............................................ (167,434) FINANCING ACTIVITIES Proceeds from borrowings on line of credit....................................... 170,500 Payments on line of credit....................................................... (173,000) Repayments of debt............................................................... (388,892) --------- Net cash used in financing activities............................................ (391,392) --------- Net decrease in cash and cash equivalents........................................ (157,317) Cash and cash equivalents at beginning of period................................. 157,987 --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD....................................... $ 670 ========= Interest Paid.................................................................... $ 352,387 ========= Taxes Paid....................................................................... $ 0 =========
See accompanying notes 9 IPAC PHARMACY, INC. NOTES TO FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES DESCRIPTION OF BUSINESS IPAC Pharmacy, Inc. (the Company) operates in one business segment providing a broad range of healthcare services primarily to long-term care, assisted living facilities and other institutional settings. The Company provides pharmacy, pharmacy consulting, infusion therapies and respiratory services. On July 31, 1996 substantially all of the Company's assets were sold to NCS HealthCare, Inc. REVENUE RECOGNITION Revenue is recognized when products or services are provided to the customer. A significant portion of the Company's revenues from sales of pharmaceutical and medical products are reimbursable from third-party payors (principally Medicaid and Medicare). The Company monitors its receivables from these reimbursement sources under policies established by management and reports such revenues at the net realizable amount expected to be received from these third-party payors. CASH EQUIVALENTS The Company considers all investments in highly liquid instruments with original maturities of three months or less at the date purchased to be cash equivalents. Investments in cash equivalents are carried at cost which approximates market value. ACCOUNTS RECEIVABLE An allowance for doubtful accounts is provided for the estimated losses that will be incurred in the collection of outstanding accounts receivable balances. Estimated losses are based on a review of the current status of outstanding accounts receivable balances and historical collection experiences. INVENTORIES Inventories consist primarily of purchased pharmaceuticals and medical supplies and are stated at the lower of cost, determined using the first-in, first-out (FIFO) method, or market. PROPERTY AND EQUIPMENT Property and equipment are stated at cost. Depreciation on property and equipment is computed using the straight-line method for all property and equipment over the estimated useful lives of the assets (primarily 5 to 10 years). GOODWILL AND OTHER INTANGIBLES The Company has classified as goodwill the cost in excess of fair value of the net assets acquired in purchase transactions. Goodwill is being amortized over 15-year periods using the straight-line method. The carrying value of goodwill is evaluated if circumstances indicate a possible impairment in value. If undiscounted cash flows over the remaining amortization period indicate that goodwill may not be recoverable, the carrying value of goodwill will be reduced by the estimated shortfall of cash flows on a discounted basis. The Company's organizational costs and noncompete covenant costs are being amortized over 5 years using the straight-line method. 10 IPAC PHARMACY, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) INCOME TAXES The Company follows Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. This accounting standard requires that the liability method be used in accounting for income taxes. Under this accounting method, deferred tax assets and liabilities are determined based on the differences between the financial reporting basis and the tax basis of assets and liabilities and are measured using the enacted tax rates and laws that apply in the periods in which the deferred tax asset or liability is expected to be realized or settled. USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results can differ from these estimates. 2. LONG-TERM DEBT Long-term debt consists of the following:
JULY 31, 1996 ------------- Notes payable--7.5% to prime rate plus 2% or 10% if greater................................................ $ 3,401,968 Notes payable--to related parties, non-interest bearing................................................ 153,452 ---------- 3,555,420 Current maturities....................................... 473,422 ---------- $ 3,081,998 ==========
The future maturities of long-term debt are as follows: Fiscal Years Ending July 31: 1997................................................... $ 473,422 1998................................................... 305,336 1999................................................... 339,330 2000................................................... 367,609 2001................................................... 402,905 ---------- $1,888,602 ==========
3. LINE OF CREDIT The Company had a $150,000 line-of-credit (collateralized by certain Company assets) which was terminated on July 31, 1996. Interest was charged on borrowings at prime plus 2% (10.75% at July 31, 1996) and was payable monthly. 11 IPAC PHARMACY, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 4. INCOME TAX EXPENSE Income tax expense for the period from October 1, 1995 to July 31, 1996 consists of:
CURRENT DEFERRED TOTAL -------- -------- -------- Federal........................................... $217,100 $(54,600) $162,500 State............................................. 21,500 (13,700) 7,800 -------- -------- -------- $238,600 $(68,300) $170,300 ======== ======== ========
The Company's deferred income tax asset is primarily due to the temporary effect of the allowance for doubtful accounts and accrued vacation. The differences between the statutory federal income tax rate of 34% and the effective income tax rate of 117% is due primarily to goodwill amortization. 5. OPERATING LEASES The Company is obligated under several operating leases primarily for real estate, machinery and office equipment. Future minimum lease payments under noncancelable operating leases as of July 31, 1996 are as follows:
YEAR ENDING SEPTEMBER 30 AMOUNT - ------------------------- ---------- 1996 $ 37,980 1997 227,882 1998 197,010 1999 159,752 2000 146,198 Thereafter 1,193,250 ---------- $1,962,072 ==========
Rent expense for the period from October 1, 1995 to July 31, 1996 was $177,027, which includes amounts with a related party (see Note 6). 6. RELATED PARTY TRANSACTIONS The Company has a note payable due December 31, 2004 that accrues interest at the greater of prime rate plus 2% or 10%, if to a limited partnership, of which an officer of the Company is a partner. Interest expense relating to this note approximated $181,691 for the period from October 1, 1995 to July 31, 1996. The Company's accounts receivable at July 31, 1996 include $225,889 of customer balances due from the sole shareholder of the company, Prestige Care, Inc. 12 PRO FORMA CONSOLIDATED FINANCIAL DATA The following unaudited Pro Forma Consolidated Balance Sheet as of June 30, 1996 and Consolidated Statement of Income for the year ended June 30, 1996 are based on the historical consolidated financial statements of the Company. The Consolidated Balance Sheet is adjusted to give effect to acquisitions completed subsequent to June 30, 1996 and prior to August 28, 1996, and to the sale of 3,650,000 shares of Class A Common Stock by the Company pursuant to a registered public offering in September 1996 and the application of the estimated net proceeds therefrom as if these events had occurred on June 30, 1996, but does not give effect to borrowings of approximately $3.1 million incurred subsequent to August 28, 1996. The Pro Forma Consolidated Statement of Income is adjusted to give effect to the completion of acquisitions completed subsequent to June 30, 1995 and prior to August 28, 1996, and to the sale by the Company in February 1996 of 4,476,000 shares of Class A Common Stock and the application of the net proceeds therefrom as if these events had occurred as of July 1, 1995. The Pro Forma Consolidated Statements of Income combine the historical operations of the Company with the historical operations of the acquired businesses prior to the dates the Company made such acquisitions, using the purchase method of accounting. The pro forma operating results are not necessarily indicative of the operating results that would have been achieved had the acquisitions actually occurred at July 1, 1995. These Pro Forma Consolidated Financial Statements are based on the assumptions set forth in the notes to such statements. PRO FORMA CONSOLIDATED BALANCE SHEET(1) JUNE 30, 1996 (IN THOUSANDS) ASSETS
HISTORICAL NCS HEALTHCARE OFFERING PRO FORMA AND ACQUIRED PRO FORMA AS SUBSIDIARIES COMPANIES(A) PRO FORMA ADJUSTMENTS(B) ADJUSTED -------------- ------------ --------- -------------- --------- Current assets: Cash and cash equivalents....... $ 21,460 $(17,892) $ 3,568 $102,892 $106,460 Accounts receivable, net........ 27,762 5,200 32,962 -- 32,962 Inventories..................... 7,487 2,763 10,250 -- 10,250 Prepaid expenses and other assets........................ 2,484 205 2,689 -- 2,689 -------- -------- -------- -------- -------- Total current assets.......... 59,193 (9,724) 49,469 102,892 152,361 Property, plant and equipment, net............................. 10,283 2,727 13,010 -- 13,010 Goodwill, net..................... 39,101 26,930 66,031 -- 66,031 Other assets, net................. 2,091 1,309 3,400 3,400 -------- -------- -------- -------- -------- Total assets.................. $110,668 $ 21,242 $131,910 $102,892 $234,802 ======== ======== ======== ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable................ $ 4,968 $ 719 $ 5,687 $ -- $ 5,687 Accrued expenses and other current liabilities........... 5,088 1,639 6,727 -- 6,727 Current portion of long term debt.......................... 801 5,196 5,997 (4,000) 1,997 -------- -------- -------- -------- -------- Total current liabilities..... 10,857 7,554 18,411 (4,000) 14,411 Long-term debt, excluding current portion......................... 1,961 3,088 5,049 -- 5,049 Convertible subordinated debentures...................... 6,549 -- 6,549 -- 6,549 Minority interests................ 201 -- 201 -- 201 Stockholders' equity: Preferred stock................. -- -- -- -- -- Common Stock, par value $.01 per share: Class A....................... 56 3 59 39 98 Class B....................... 66 -- 66 (3) 63 Paid-in capital................. 84,907 10,597 95,504 106,856 202,360 Retained earnings............... 6,071 -- 6,071 -- 6,071 -------- -------- -------- -------- -------- Total stockholders' equity.... 91,100 10,600 101,700 106,892 208,592 -------- -------- -------- -------- -------- Total liabilities and stockholders' equity........ $110,668 $ 21,242 $131,910 $102,892 $234,802 ======== ======== ======== ======== ======== - --------------- (1) See accompanying Notes to Pro Forma Consolidated Balance Sheet.
13 NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET JUNE 30, 1996 (A) Reflects acquisitions completed subsequent to June 30, 1996 and prior to August 28, 1996 by the Company, all of which were accounted for under the purchase method, at an aggregate purchase price of $36,705,000. (B) Reflects the sale of the 3,650,000 shares of Class A Common Stock by the Company pursuant to a registered public offering in September 1996 and the receipt and application of the proceeds therefrom as follows:
(IN THOUSANDS) -------------- Gross proceeds from the offering............................... $113,150 Underwriting discounts and commissions......................... (5,658) Estimated expenses of the offering............................. (600) -------- Net proceeds................................................... 106,892 Repayment of notes payable..................................... (4,000) -------- Net increase in cash and cash equivalents...................... $102,892 ========
Also reflects the conversion, by certain Selling Stockholders, of 196,268 shares of Class B Common Stock into an equal number of shares of Class A Common Stock in connection with the registered public offering. 14 PRO FORMA CONSOLIDATED STATEMENT OF INCOME (1) YEAR ENDED JUNE 30, 1996 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
HISTORICAL ------------------------------- NCS HEALTHCARE AND ACQUIRED PRO FORMA PRO SUBSIDIARIES COMPANIES(B) ADJUSTMENTS FORMA -------------- ------------ ----------- ----------- Revenues....................... $113,281 $ 64,255 $ -- $ 177,536 Cost of revenues............... 82,415 48,430 -- 130,845 -------- -------- ------- ---------- Gross profit................... 30,866 15,825 -- 46,691 Selling, general and administrative expenses...... 22,236 11,132 381(C) 33,749 Special compensation........... 2,811(A) -- -- 2,811 -------- -------- ------- ---------- Operating income(loss)......... 5,819 4,693 (381) 10,131 Interest expense............... (2,282) (567) 1,244(D) (1,605) Interest income................ 671 -- (671)(D) -- -------- -------- ------- ---------- Income before income taxes..... 4,208 4,126 192 8,526 Income tax expense............. 1,852 1,814 84 3,750 -------- -------- ------- ---------- Net income..................... $ 2,356 $ 2,312 $ 108 $ 4,776 ======== ======== ======= ========== Net income per share........... $ 0.26 $ 0.38 ======== ========== Shares used in the computation.................. 8,971 12,695 ======== ========== - --------------- (1) See accompanying Notes to Pro Forma Consolidated Statement of Income
15 NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF INCOME YEAR ENDED JUNE 30, 1996 (In thousands) (A) Represents a one-time, non-recurring charge in connection with the termination of performance incentive agreements with prior owners of certain acquired companies. (B) The historical statement of income data for the acquired companies for the year ended June 30, 1996 represents the results of operations of such companies from July 1, 1995 to the earlier of their respective dates of acquisition or June 30, 1996. Each of the acquisitions has been accounted for as a purchase. Accordingly, the results of the operations of each such acquired company are included in the Company's results of operations from the date of acquisition. The table below presents the details of the historical operations of the acquired companies. The details of the historical operations of the acquired companies for the periods from July 1, 1995 to the earlier of their respective dates of acquisition or June 30, 1996 are as follows:
ACQUIRED COMPANY (DATE OF ACQUISITION) --------------------------------------------------------------------------- UNI-CARE IPAC THRIFTY OTHERS OTHERS (MAY 15, (AUGUST 1, (AUGUST 13, (FISCAL (FISCAL 1996) 1996) 1996) 1996) 1997) TOTAL -------- ---------- ----------- ------- ------- ------- STATEMENT OF OPERATIONS DATA: Revenues...................... $14,500 $ 13,829 $11,627 $12,821 $11,478 $64,255 Cost of revenues.............. 11,165 10,164 8,604 9,919 8,578 48,430 ------- -------- ------- ------- ------- ------- Gross profit.................. 3,335 3,665 3,023 2,902 2,900 15,825 Selling, general and administrative expenses..... 2,300 3,079 1,789 1,618 2,346 11,132 ------- -------- ------- ------- ------- ------- Operating income.............. 1,035 586 1,234 1,284 554 4,693 Interest expense.............. -- 324 159 80 4 567 ------- -------- ------- ------- ------- ------- Income before income taxes.... 1,035 262 1,075 1,204 550 4,126 Income tax expense............ 455 115 473 529 242 1,814 ------- -------- ------- ------- ------- ------- Net income.................... $ 580 $ 147 $ 602 $ 675 $ 308 $ 2,312 ======= ======== ======= ======= ======= ======= (C) The adjustment to selling, general and administrative expenses consists of (i) a reduction of $1,012 to acquired companies' historical amounts of compensation for owners and certain employee benefits for the difference between such historical amounts and amounts specified in the post-acquisition employment contracts for such individuals and continuing benefit programs and (ii) a $1,393 adjustment to increase amortization of the excess of cost over the fair value of net assets of the acquired companies, using a 30-year amortization schedule. (D) The adjustments reflect the reduction in interest expense and the elimination of interest income, had the entire net proceeds of approximately $67.0 million from the Company's initial public offering in February 1996 been used to reduce certain outstanding indebtedness and to fund the acquisitions, as if such offering had occurred on July 1, 1995.
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